Transportation and Storage Infrastructure for Petroleum Commodities and Products
EAST AFRICAN CRUDE OIL PIPELINE
- The EACOP will traverse the ten (10) districts of Hoima, Kikuube, Kakumiro, Kyankwanzi, Gomba, Mubende, Lwengo, Sembabule, Kyotera and Rakai in Uganda (approx. US$3.6bn).
- Of the total 1,443km, Uganda will host 296 km of the pipeline. This is going to take up about 2,740 acres of land. A final Resettlement Action Plan report was submitted to the Ministry by the Pipeline Project Team (PPT) and the report was approved in 2021.
- The EACOP is to be implemented within a framework of four major agreements which include: - (i)the Intergovernmental Agreement, (ii) the Host Government Agreement (HGA), (iii) the Tariff and Transportation Agreement (TTA) and (iv) Shareholders Agreement (SHA). The agreements signed on 11th April 2021 include: -
- The Uganda Host Government Agreement (HGA) between the Government of Uganda and the East African Crude Oil Pipeline (EACOP) Company – signed by the Minister of Energy and Mineral Development (MEMD) on behalf of the Government of Uganda, and the East African Crude Oil Pipeline (EACOP) Company, on behalf of EACOP Co. The HGA concluded the legal framework and contractual obligations between Uganda as the host country, and EACOP Co. as the project company Co.;
- The Shareholders Agreement (SHA), which defines the rights and responsibilities of the shareholders in the EACOP Co. The shareholders are: the Uganda National Oil Company (UNOC) with 15%; the Joint Venture Partners (Total Holdings International B.V. with 62% and CNOOC Uganda Limited with 8%) and the Tanzania Petroleum Development Corporation (TPDC). TPDC will take shareholding of up to 15%. The SHA is significant because it has constituted the EACOP Company, and will now guide the funding of shareholding, finance structure and general governance of the company; and,
- The Tariff and Transportation Agreement (TTA), which defines the rights and responsibilities of the shippers on the one hand, and the transporter on the other hand. The TTA was signed between the transporter, EACOP Co., and the Shippers of the crude oil who are the Government of Uganda, UNOC, Total E&P Uganda Limited and CNOOC Uganda Limited.
- Significance of the agreements signed:
Oil companies and Government to proceed with the approval and award of contracts to the main Engineering, Procurement and Construction (EPC) contractors. This will enable the construction work for the projects to proceed.
- Government and the Companies estimate that First Oil will be within four (4) years, with the actual construction starting this year. However, other processes are already ongoing including the acquisition of land for the pipeline and the EPC management activities. It is important for the people of Uganda to take note of, and position themselves to benefit from, the extensive activities already going on.
Specific benefits that will accrue to Uganda and Ugandans from the launch of the projects include the following:
- De-risking all the other upcoming projects including the refinery and the new exploration projects – the development of the Upstream projects guarantees the supply of feedstock into the refinery, while the pipeline and the refinery provide evacuation options for future oil discoveries in the new exploration areas;
- Employment of Ugandans – This will be through direct employment of about 14,000 people by the companies, indirect employment of about 45,000 people by the contractors, and induced employment of about 105,000 people as a result of utilisation of other services by the oil and gas sector. Of the direct employment, 57% are expected to be Ugandans, which is expected to result in an estimated USD 48.5 million annual payment to Ugandan employees;
- Participation of Ugandan enterprises in the provision of goods and services – At least 28% of the USD 15 billion (equivalent to USD 4.2 Bn) investment during the development and construction will go to Ugandan Companies through provision of various goods, services and works;
- Contracts: Contracts worth USD 167 million out of the USD 1.362 billion Recommendations to Award (RTAs) for the Tilenga and Kingfisher projects that have been presented to the Petroleum Authority of Uganda before FID, are to be awarded directly to Ugandan companies. This only accounts for nineteen (19) out of the over thirty (30) work packages to be awarded by the Licensees. However, it is important to note that there will be many more subcontracts given to Ugandan companies through subcontracting by the Level-1 contractors;
- Capacity building and technology transfer through subcontracting and joint venturing – With the involvement of world-class oil service companies and the expected Joint Venture and sub-contracting opportunities, Ugandan companies are expected to greatly benefit from the expected partnerships. As witnessed during the exploration phase, we expect Ugandan companies to progressively gain capabilities to provide technical services that have hitherto been a preserve of the more experienced foreign companies; and,
- The Front-End Engineering Design (FEED) and Construction Management (EPCm) study was submitted by TOTAL E & P to Government and was reviewed and approved by the Petroleum Authority of Uganda, with input from the Ministry of Energy and Mineral Development, and Uganda National Oil Company Limited.
- The Environment and Social Impact Assessment for the EACOP was concluded the ESIA certificate was issued by NEMA on 30th November 2020.